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Jim VanderMey

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October 18, 2018

Blockchain in Healthcare: Hip or Hype?

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I mentioned in a previous blog post that a few weeks ago I was on a panel that was titled, Blockchain and AI, but we didn’t talk about blockchain.

As we discussed in the panel call preparing for the event, it became pretty clear that there are a lot of questions, but it really wasn’t worth focusing upon.

I recalled an article I read in Healthcare IT News last month, in which Blockchain was being described in glowing terms. In it, Deloitte says healthcare organizations are particularly interested in four potential promises from blockchain.

Here is an excerpt from that article:

Disintermediation – Blockchain could help health systems avoid the need to rely on costly go-betweens such as medical data aggregators, provider data-validation servicers, claims clearinghouses and more.

Transparency and Auditability – Value-based reimbursements, clinical supply chains and other complex transactions could benefit from more openness and efficiency among various stakeholders.

Industry collaboration – More efficient information sharing for use cases such as provider credentialing, longitudinal patient records and clinical trials could be enabled by blockchain.

New business models. The technology potentially offers new blockchain-based revenue opportunities, and could transform notions of patient data ownership and monetization, according to Deloitte.

Given these potentials, some 63 percent healthcare execs said they plan to invest more more than $1 million in blockchain over the next calendar year.

Really?  63% of healthcare executives plan on investing more than $1M in blockchain in the next year?  Call me incredulous.  In the broad landscape of healthcare where provider organizations, payers, pharma and life sciences companies are lumped together, it might make sense but when public statements are made like this, it creates a sense in the industry of hype that is not rooted in reality.

Provider credentialing is one area that could benefit from this technology, as systems of trust are built with document provenance, etc. as an extension of our largely manual processes and shared databases today.  Supply chain is another valid use case given the risk of counterfeit or poor quality products.  IBM has made significant investments in the digitally-enabled supply chain in the food industry, and creating tags for products that are consumed is a fundamentally complex task that has great analogues in healthcare.

But when I’m asked by hospital CIOs about blockchain, I always say, “wait”.  Here’s why:

The data model doesn’t support rich medical information
Genomics, MRI images, etc. cannot be stored within the chain and will have to be linked from existing PACS and EHR systems. Therefore, the interfaces and APIs will have to be enabled by the enterprise healthcare software companies.

Technical sophistication of the consumer.
The idea of distributed trust relies on a sophisticated consumer to be a full participant in the ecosystem of trust. People latch on to the idea of a patient having full privacy to their medical data with delegated authority to only those entities that need it. But that assumes a degree of technical sophistication for the consumer, as well as an advanced knowledge of how the various entities in a healthcare ecosystem relate to one another. For example, if a hospital uses an off-shore service to read pediatric CAT scans after hours, who manages the trust relationship to that individual provider?  Finally, as we know in healthcare we want our data to be private and secure, until there is a severe event and then we want to clinical team to know everything about us individually and apply all medical knowledge to our case for the best outcome. In these cases, when you are in the emergency room, is the blockchain the best way to get access to the medical record?

Lack of regulatory body
In the financial services industry, the R3 CEV is an example of a consortium in financial services working on distributed ledger and identity. There is clear incentive and opportunity in that industry to create value through blockchain. There is no equivalent consortium in healthcare and it will require the work of the ONC to create the regulatory space and incentive to move beyond todays point to point systems of trust (HIEs) and claims payment systems.

Will be lead by payment vendors
Claims payment and pre-auths are probably an early space for opportunity through blockchain. Which means that the revenue cycle software vendors and payers will be at the forefront of the discussion. As you have contracting opportunities and discussions about future product developments with these companies, see what they are saying about hyperledger and other related technologies.

In the financial services industries there are interesting companies like Ripple that identified a problem that is architecturally aligned to the technology without having to over-impose functionality. In their words, they “provide one, frictionless experience to send money globally using the power of blockchain.” I believe that the early adopters in healthcare will look for a use case and and then clearly articulate a compelling value proposition that can only be solved through blockchain.

Call me a skeptic, but in the space where dollars, time and attention are the limited commodities CIOs are faced with, devoting time to blockchain as a hospital CIO seems to be premature.  But, maybe I just haven’t seen the right project yet.

On Thursday, November 1, I will be closing speaker at the AEHIT Fall Summit in San Diego. I’m speaking on the Hype of Healthcare IT. If you have a blockchain success story you would like to share with me let me know, otherwise this technology goes in the Hype Bucket.

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A data center fire isn’t a good scenario for any business. But in healthcare, critical systems being down can have a truly negative impact on patients, the community and the business.

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About the Author

Jim VanderMey, Chief Innovation Officer, has been with OST since the very beginning. Throughout his career, Jim has taught and spoken at international conferences; acquired a wide range of technical certifications; consulted for enterprises in manufacturing, healthcare and many other industries; and accomplished much more. Outside of OST, Jim is a commissioner for the State of Michigan Department of Health and Human Services HIT Commission, sits on multiple advisory boards at universities and pursues other community involvement activities. Outside of work, you’ll often find Jim reading, paddle-boarding, spending time with his family (including six grandkids) and serving with his wife Ann at their church.